Tomago Aluminium warns of 'energy crisis' as power supply falters

By Peter Hannam & Cole Latimer

Updated8 June 2018 — 6:35pmfirst published at 1:38pm

Tomago Aluminium, Australia's biggest smelter of the metal, warned on Friday that it faced curtailing operations for a third time this week because of power shortages across the national electricity market.

As of Friday afternoon, NSW plants reporting outages or reduced output included the gas-fired Tullawarra power station, Mt Piper coal-fired power plant - both owned by EnergyAustralia.

Also reporting coal-fired power units offline were Sunset Power's Vales Point and AGL's two Hunter Valley stations, Bayswater and Liddell.

The Australian Energy Market Operator (AEMO) issued an actual lack of reserve alert at 5.44 pm only to cancel it 23 minutes later after the market responded with extra supply - and demand eased back ahead of the long weekend.

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Tomago said it had been forced to halt each of three potlines this week - one on Tuesday and two on Thursday - because of a lack of reserve across the grid serving eastern states.

Matt Howell, Tomago's chief executive, told Fairfax Media on Friday lunchtime, the company was concerned it may face another curtailment of operations later in the day. Tomago accounts for about a tenth of the state's electricity use.

Just before 6.30 pm, he said the company had probably "dodged a bullet", with the demand peak over.

Earlier, Mr Howell said Australia is "at a crisis point with our energy system".

The alert system has been installed to signal to energy operators that additional supplies may have to be activated from gas or other power sources to avert blackouts. Level 3 is the highest alert level in the system.

By mid-afternoon, AEMO reissued a Lack of Reserve level 1 alert for 4.30pm to 9pm, local time. The capacity requirement was 1550 megawatts, with available reserve at 771 megawatts.

AEMO said this was partly due to heavier than expected cloud cover which reduced the output from solar rooftop generation, resulting in increased demand from the grid.

Power plants struggle

Mr Howell dismissed media reports that AGL, its main supplier, was to blame for the shortfall, noting the problem was with the overall market.

Even so, AGL has had difficulties with its two Hunter Valley coal-fired power stations of late.

Bayswater is understood to have been down to just one of its four generation units after scheduling one of them for maintenance. Its nearby sister plant, Liddell, was operating at about half of its capacity.

Another plant struggling this week has been the Vales Point coal-fired power station, also in NSW, which had one of its two units trip on Thursday. The plant is owned by Sunset Power International.

"We have one unit currently out," a Vales Point spokesman said. "It'll come back online in the not too distant future."

EnergyAustralia confirmed one unit at Mt Piper power station has been down since Tuesday, after a steam leak, and will not came back online until the weekend.

Its Tallawarra power station is under going maintenance and will return to service next week.

“Due to confidentiality AGL is unwilling to discuss its contract with Tomago," an AGL spokesman said.

“We can confirm a significant number of coal plants are unavailable across the NSW market and there is reduced capacity to meet higher winter demands.”

Vales Point power station in NSW tripped on Thursday.Credit:James Whelan

Mr Howell said the planned and unplanned outages of coal-fired generators had left NSW's power supply at the mercy of the weather.

“When the sun is shining in the middle of the day and the wind is blowing there is generally sufficient capacity," he said in the statement.

"When we need it the most - early mornings and evenings in summer and winter, our solar resources are useless, and the nature of wind resources frequently means that many wind assets are idle."

'This is the likely future'

Tomago was forced to curtail operations at the height of a heatwave in February 2017, leaving its potlines close to failure. If left to cool for too long, the molten metal solidifies, ruining the potline.

Since then, Victoria's Hazelwood power plant has closed and although much more renewable energy has been added to the network, dispatchable supplies can be strained during calm days or when the sun isn't shining.

“This is not summer with extreme demand. This is the likely future of our energy grid as once reliable baseload generators exit the [NEM] and are mostly replaced with intermittent wind and solar projects with no practical storage to speak of," Mr Howell said.

“Our energy debate should not advocate either renewables or conventional thermal," he said. "As with most things in life, we need a balance and we have reached a point where urgent rebalancing is required.”